Companies making donations

I am a director of a small limited company and want to make a donation to a local children's hospice. Can you advise me on the implications?

1st July 2011

Assuming that the children’s hospice is a registered charity, your company will get corporation tax relief on the donation. To get the tax relief, the company simply makes the payment to the charity and deducts the amount as a 'non-trading charge' when working out its profit for corporation tax purposes.

Charitable donations cannot be used to create or increase your company's trading losses, and they cannot be carried over from year-to-year. So if you make a donation of more than your taxable profit, the excess is not tax effective.

Please note, if the company receives any benefit from the charity as a result of the donation, such as an advertisement in its newsletter, there are restrictions of the value of the benefit, in order that the donation still qualifies for relief.

Furthermore, there are different rules if you were to gift anything other than cash, such as land or equipment.

If you would like to discuss this or any other accountancy or tax matter, please feel free to contact your local TaxAssist Accountant.

By Jo Nockels

Disclaimer: Advice shared in this blog is intended to inform rather than advise. Taxpayer's circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this forum, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

Contact us today to make an appointment at your local office

Submit an enquiry